Tuesday, February 27, 2024

Opinion | Taylor Swift and the Economics of Celebrity Excursions


Like virtually each different nation, Sweden has been experiencing excessive inflation lately. Client costs have risen 9.7 p.c over the previous yr, reflecting a number of components: massive spending to assist households through the pandemic, Covid-related disruptions of provide chains, Russia’s invasion of Ukraine and Beyoncé.

Severely. Beyoncé kicked off her newest world tour in Sweden final month, and it has been broadly argued that a large inflow of holiday makers attending her first two concert events prompted a main, if non permanent, surge in lodge and restaurant costs, large enough to have a noticeable impact on Swedish inflation total.

I haven’t seen related reviews for the opposite enormous live performance tour now underway, however I wouldn’t be stunned if Taylor Swift concert events are producing lodge and restaurant booms within the cities wherein she performs. Reside music is large enterprise.

However why is it such large enterprise? And the way has it modified over the long term?

Look, I do know that there are extra necessary points on the market. However let’s take a break right here, largely as a result of I discover serious about the economics of music enjoyable, but additionally as a result of the live performance enterprise presents some fascinating classes concerning the generally perverse position know-how can play in figuring out incomes.

Specifically, as I’ll clarify, the true puzzle right here is why Taylor Swift doesn’t make much more cash.

This isn’t the primary time I’ve written about this topic. Impressed partly by the work of my late former colleague Alan Krueger, I’ve in reality weighed in on Taylor Swift in historic perspective earlier than. However Swift’s newest tour is her largest but, and I additionally imagine that I’ve some new insights into what could also be happening right here.

So, Taylor Swift makes some huge cash. Being a congenital cynic, I’d prefer to attribute her fame to advertising hype, however the unhappy fact is that she’s a extremely gifted songwriter and musician with outstanding stage presence; take a look at the video beneath, displaying her solo efficiency at considered one of NPR’s Tiny Desk concert events. Even in case you aren’t a fan, it’s important to admit that she’s the true deal.

Nonetheless, there are lots of gifted artists. Why do a couple of earn a lot? There’s a regular financial concept about that, specified by a well-known paper by the economist Sherwin Rosen, “The Economics of Superstars.” Rosen argued that fashionable know-how meant that the potential attain of performers was a lot bigger than it had been when reside efficiency was the one strategy to entertain an viewers, so {that a} musician (or, his instance, a comic) who was, or was perceived to be, even a bit higher than his or her rivals may earn massive sums by acting on mass media, promoting data, and so forth.

However on the floor, that’s not what’s occurring with Taylor Swift and Beyoncé. They’re making enormous sums not primarily from document or streaming royalties however from concert events — which is, by the way in which, regular. One of many classes I realized from Alan Krueger is that musicians have at all times made their cash primarily by touring; this was true even through the CD period, when document corporations had been earning money hand over fist however passing little or no on to the artists. It’s much more true now, on this age of streaming.

However there are reside performances, after which there are reside performances; ticket gross sales for every of Swift’s concert events are anticipated to be $11 million to $12 million. What know-how explains that?

The reply, if you concentrate on it, is that cutting-edge know-how generally known as the microphone, which makes it doable for an artist to play reside to tens of 1000’s of individuals. To be extra exact, the enabling know-how is microphones plus extra superior modern sound methods that make it doable for followers at stadium and area concert events to really hear the musicians (and for the musicians to listen to themselves); these methods hadn’t but been developed when the Beatles gave their well-known Shea Stadium live performance, which was largely inaudible over the screams.

However right here’s the factor: Massively profitable excursions by music superstars aren’t a brand new improvement. They return at the least to the ’50s — the 1850s, when Jenny Lind, the “Swedish nightingale,” toured America beneath the auspices of none aside from P.T. Barnum. Lind did 95 concert events, with cumulative ticket gross sales of greater than $700,000, or greater than $7,000 per live performance.

That won’t sound like a lot, and Lind acquired significantly lower than that — Barnum took a big minimize. (Swift — who can be an excellent businesswoman — is reportedly receiving extra than the income from ticket gross sales, as a result of the promoters count on to promote loads of merchandise too.) However client costs within the early 1850s had been about one-fortieth what they’re now, so in actual phrases Lind’s ticket take wasn’t as trivial because it might sound. (Information right here, sadly gated.)

And arguably, even that understates how properly Lind did by fashionable requirements. The quantity persons are keen to spend to attend an enormous cultural occasion presumably will depend on how a lot they will afford, and America is, even adjusted for inflation, a vastly richer nation now than it was 170 years in the past. In greenback phrases, per capita G.D.P. is at present about 600 instances as excessive because it was circa 1850. If we regulate by per capita revenue, every of Lind’s concert events took within the equal of round $4.5 million in the present day.

Swift’s concert events are taking in additional than twice that. However why no more? In spite of everything, Lind carried out in live performance halls that needed to be sufficiently small so that folks may hear an unamplified (if skilled) human voice; Swift is filling stadiums that maintain 50,000 or extra folks.

As I stated, the true query, arguably, is why Swift isn’t making much more cash.

One reply is perhaps that the sheer measurement of the venues signifies that Taylor Swift tickets aren’t as scarce as Jenny Lind tickets had been within the day, though offsetting this level is the truth that the U.S. inhabitants in the present day is loads greater than it was in 1850.

One other, and I believe higher, reply is that reside concert events play a extra restricted position now than they did 170 years in the past. Again then they had been the one strategy to hear music, or at the least professionally carried out music. These days music, together with movies of reside performances, is universally obtainable. Reside concert events are nonetheless a particular expertise; as common readers know, they’re considered one of my chief pleasures in life. However they serve a smaller area of interest of demand than they used to.

In any case, except for her music, Taylor Swift is giving us meals for thought — a reminder each that the results of technological progress could be extra advanced than you assume, and that the applied sciences that matter most might also not be those you assume.

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